Phobic fear is accompanied by intense bodily responses modulated by the amygdala. An amygdala moderated psychophysiological measure related to arousal is electrodermal activity. We evaluated the contributions of electrodermal activity to amygdala-parahippocampal regional cerebral blood flow (rCBF) during phobic memory encoding in subjects with spider or snake phobia. Recognition memory was increased for phobia-related slides and covaried with rCBF in the amygdala and the parahippocampal gyrus. The covariation between parahippocampal rCBF and recognition was related to electrodermal activity suggesting that parahippocampal memory processes were associated with sympathetic activity. Electrodermal activity further mediated the amygdala effect on parahippocampal activity. Memory encoding during phobic fear therefore seems contingent on amygdala's influence on arousal and parahippocampal activity.